November 30, 2022
Finance is an essential component of our daily lives. Unfortunately, most people commonly make the mistake of underestimating the importance of financing and often take it lightly. However, knowing more about the current financial rules, trends, and ways to save money is essential. This helps you to live a happy and stress-free life with the possibility of early retirement. For instance, you must know about the nbfc mfi in India the current taxation policies, and various plans, such as the PPF and NPS systems, to help you save more money.
Basics of personal finance that you must know of
Planning your personal finances will help you in the longer run. If you want to have an early retirement, this is the first step. Here are some element that you must know, along with some tips that can completely change your future
- Budgeting is essential
Most people often ignore the importance of budget planning and tend to spend their money as per needs and desires. However, they often end with no savings. Irrespective of your income amount, it is essential to lay out a budget plan and lay emphasis on savings and investment, and that money must be taken out and kept aside first. If you are unsure how to start budget planning, journaling or penning down your monthly expenses and sorting them into groups of needs, wants, and desires shall be an excellent way to begin.
- Having an emergency fund
What if you are fired from your job tomorrow? Would you have ample savings to sustain you for the next 3-4 months while you look for other working opportunities? Most people don’t. This is where people take the toll by keeping an emergency fund. An emergency fund is a backup for at least six months of survival when no other income source is available. This includes your EMI, food, bills, etc. Planning an emergency fund must be the first type of savings that you make before investing in any big commodities.
- Lower your credit card balance
A higher credit card balance makes one tempted and compelled to make more significant purchases. They buy things just because they are able to, rather than understanding their needs. Instead, you must only use your credit card in case of emergency or to make smaller purchases. Keep your credit card only for maintaining your score, and make maximum expenditures from the money in your hand.
- Always pay your bills on time
Paying bills will help you stay away from debt. When one misses paying bills they are often forced to face debt in the future. Therefore, it is important to pay the bills right on time. This also helps you to maintain your score.
- Pay in EMI than the full amount
If you are planning on making bigger purchases, consider buying them on EMI rather than paying the amount in full. This will help you reduce a huge financial load. However, it is important to select the EMI plan wisely. Look out for the percentage and tenure to estimate the amount you shall be spending more. Always prefer going with no-cost EMI or ones where the percentage of interest is much lower.
- Start investing earlier
ou must invest in the correct plans and schemes right from your first salary. Invest in schemes such as SIPs that help save a fixed part of your monthly income. Further consider buying bonds, mutual funds and stocks based on your earnings. Early investment is the only way to early retirement. You must at least save up to 20% of your earnings each month. While saving, always know more about the exit scheme, interest rate, and lock-in tenure.
- Consider microfinancing from leading microfinance companies in India
If you have a low-income status and are looking for loans, consider approaching the banks or microfinance companies in India for a microfinance loan, then a personal loan. Personal loans will be available at a greater interest rate, and you will pay more.
In the end, remember, whatever you ignore during managing finance is your hard-earned money. Thus, you must avoid unnecessary expenditures. Rather, invest in yourself and your safe and secure future. If you are looking for leading microfinance companies in India for a loan, check out Chaitanya India.